Sensex jumps 1,000 points: 3 reasons why stock markets are rallying today

The stock market staged a strong rally on Monday, with the Sensex rising over 800 points and the Nifty moving close to 23,260 in early trade. The gains come amid a decline in crude oil prices, improving foreign investor sentiment and a weakening global artificial intelligence (AI) trade.At around 9.23 am, the BSE Sensex was up 801.87 points, or 1.08%, at 75,261.40. The NSE Nifty 50 gained 205.95 points, or 0.89%, to trade at 23,259.05.Reliance Industries led several heavyweight stocks higher after reporting stronger-than-expected quarterly earnings. The broader rally also saw buying in metal, PSU bank, auto and oil and gas stocks.Here are three key reasons behind the market rally. CRUDE OIL PRICES COOLOne of the biggest positives for Indian equities is the decline in crude oil prices. Brent crude, which had climbed to around $118 per barrel last week, fell to around $110.01 on Monday, down 3.02%. US West Texas Intermediate (WTI) crude declined 3.05% to $100.94.The decline follows hopes of progress in discussions involving Iranian officials and Qatari mediators to end the US-Israeli war on Iran. Any progress towards a deal could ease concerns around energy supply disruptions and reduce the geopolitical risk premium in oil prices. This is particularly important for India, which relies heavily on imported crude oil. Persistently high oil prices can increase the country's import bill, widen the current account deficit, put pressure on the rupee and add to inflation. They can also raise input and transportation costs for businesses.The easing in oil prices has therefore provided some relief to investors. The Nifty Oil and Gas index was up 2.39% in early trade, with Reliance Industries rising 4.42%. NTPC gained 3.16%, while Power Grid advanced 1.80%.GLOBAL AI STOCK SELLOFF BENEFITS INDIA'S 'COUNTER AI' POSITIONAnother important factor supporting Indian equities is the weakening of the global AI trade. The Nasdaq fell 2.8% last Friday amid concerns around valuations of AI-linked companies and the massive investments being made in the technology.The weakness in global AI stocks could benefit Indian markets because India is widely seen as a relatively less exposed or 'counter AI' play.Unlike markets where investor enthusiasm has been concentrated around large technology and AI companies, Indian equities have a broader exposure to sectors such as banking, automobiles, infrastructure, consumption and pharmaceuticals. A rotation away from expensive global AI-linked stocks can therefore make other markets, including India, relatively more attractive.Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the weakening of the AI trade was perhaps more important than the improvement in external cues."Weakening trend in AI trade is beneficial for India which is widely regarded as a counter AI play," he said.Vijayakumar noted that the Nasdaq's 2.8% decline on Friday reflected the pressure on the global AI trade. He also pointed to the decline in the US 10-year bond yield to 4.93% as another supportive external factor.The early market action showed gains across several sectors, although the Nifty IT index was up a relatively modest 0.46%.STRONG DOMESTIC FUNDAMENTALS, RIL EARNINGS AND LTCG TAX HOPESDomestic factors are also supporting the recovery. Reliance Industries, India's largest listed company by market capitalisation, reported a 40.6% jump in September-quarter net profit, beating market expectations. Growth in its energy and digital services businesses supported the performance.Jio Platforms, which made a strong stock market debut last week to become India's second-largest company by market capitalisation, also reported 13.7% growth in quarterly net profit.Foreign investor activity has shown signs of improvement as well. Overseas investors bought Rs 3,600 crore worth of Indian shares on Friday, marking their sixth session of buying in the last 10 trading sessions. This comes after significant selling by foreign portfolio investors earlier in 2026.Vijayakumar also pointed to domestic economic indicators as a source of support, including 17.94% credit growth and robust GST collections in October, which he said reflected a resilient economy gathering momentum.Another factor lifting sentiment is the growing expectation of a major rejig of long-term capital gains (LTCG) tax in the coming Budget, with the possibility of its abolition.Vijayakumar said expectations around LTCG tax relief had increased and that the market appeared to have started pricing in the possibility.Vijayakumar said the combination of improving external conditions and supportive domestic fundamentals indicated a possible turnaround in Indian equities."The 17.94% credit growth in the economy and robust GST collections in October reflect a resilient economy, gathering momentum," he said.He added that the decline in crude oil prices from last week's high of $118 to around $110 and the fall in US bond yields were providing relief to the market.For now, investors will watch whether crude prices continue to ease, foreign investors sustain their buying and the Nifty can hold on to its early gains. The trajectory of the Iran conflict and expectations around LTCG tax changes will also remain important factors for Dalal Street.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends